Acme India debt-service coverage falls below 1x in FY26

Acme India Industries Limited reported debt-service coverage of 0.89x in FY 2025-26, compared with 1.93x in FY 2024-25 and 2.96x in FY 2023-24. Under Acme India’s formula, the ratio indicates that profit after tax, non-cash expenses and interest cost were lower than interest expense plus current principal payments during FY26.

Why did Acme India’s debt-service coverage fall below 1x?

Acme India’s debt-service coverage ratio fell below 1x because its disclosed debt-service numerator was lower than its interest and current-principal-payment denominator in FY 2025-26. The company defines the ratio as profit after tax, plus non-cash expenses and interest cost, divided by interest expense plus the current payment of principal amount. The reported 0.89x means the numerator covered 89% of the denominator under that definition.

The decline extended over three financial years. Debt-service coverage fell by 1.04 times from 1.93x in FY 2024-25 to 0.89x in FY 2025-26, following a 1.03-times decline from 2.96x in FY 2023-24 to 1.93x in FY 2024-25. Acme India attributed the FY 2024-25 reduction to increased debt obligations, but its ratio-variance disclosure does not provide a separate explanation for the FY 2025-26 movement.

Finance cost increased by Rs 2.8354 crore to Rs 12.7123 crore in FY 2025-26, while revenue from operations rose to Rs 263.7077 crore from Rs 209.9952 crore and restated profit after tax increased to Rs 24.3577 crore from Rs 16.4568 crore. The supplied financial information does not disclose the separate FY26 current-principal-payment amount used in the ratio. As a result, the reported 0.89x ratio is the available measure of the gap between the company’s defined debt-service resources and obligations.

How did Acme India’s debt-equity ratio decline while coverage weakened?

Acme India’s debt-equity ratio declined because it compares total debt with total equity at the reporting date, while debt-service coverage compares earnings-based resources with interest and principal payments due during a year. Debt-equity was 0.82x at March 31, 2026, down from 1.47x at March 31, 2025. These measures therefore address different balance-sheet and cash-payment conditions.

The pre-issue capitalisation statement reported total debt of Rs 85.1821 crore at March 31, 2026, consisting of Rs 78.9609 crore of short-term debt and Rs 6.2212 crore of long-term debt. Shareholders’ funds were Rs 103.5471 crore, including equity share capital of Rs 18.065 crore and restated reserves and surplus of Rs 85.4821 crore. Acme India defines short-term debt as debt expected to be paid or payable within 12 months.

Net worth increased to Rs 103.5471 crore at March 31, 2026 from Rs 55.3682 crore a year earlier, while restated profit after tax rose by Rs 7.8991 crore. Acme India defines net worth as equity share capital plus reserves and surplus, including securities premium, general reserve and statement-of-profit-and-loss surplus. A larger equity base can reduce debt-equity even when debt-service coverage declines because interest and current principal repayments are not part of the debt-equity calculation.

What does Acme India’s working-capital funding show?

Acme India’s financing was substantially linked to working-capital facilities as of June 30, 2026. Secured fund-based facilities outstanding totalled Rs 65.869 crore, while secured non-fund-based facilities totalled Rs 68.7497 crore. Fund-based facilities provide drawn funding, while non-fund-based facilities in the disclosure include bank guarantees, letters of credit and counter-bank guarantees.

The three largest fund-based outstanding balances were Federal Bank’s working-capital demand loan of Rs 25.1759 crore, HDFC Bank’s cash-credit facility of Rs 19.9544 crore and Kotak Mahindra Bank’s cash-credit facility of Rs 10 crore. Together, these three balances represented about 83.7% of the Rs 65.869 crore secured fund-based total. HDFC and Kotak cash-credit facilities were repayable on demand, while Federal Bank’s working-capital demand loan was repayable in a lump sum on its due date.

Letters of credit outstanding totalled Rs 22.5988 crore as of June 30, 2026, of which Rs 14.2534 crore had been discounted by respective parties. Acme India also reported inventory turnover of 5.27 times in FY 2025-26, down from 7.37 times in FY 2024-25 and 14.31 times in FY 2023-24. Trade receivables turnover was 1.29 times in FY 2025-26, compared with 1.35 times and 1.85 times in the preceding two years.

What collateral and guarantees support Acme India’s facilities?

Acme India’s disclosed HDFC Bank, Kotak Mahindra Bank and Federal Bank facilities are supported by combinations of current assets, fixed-deposit margins, property collateral and personal guarantees from Suraj Pandey and Sadhvi Pandey. The arrangements link continued facility availability to security and guarantee terms in addition to the company’s repayment obligations.

HDFC Bank’s security includes a first charge over present and future stocks, book debts, bills, outstanding monies and receivables. Its disclosed collateral includes three residential plots in Sector 108, Gurugram, and its bank-guarantee facilities require a 15% cash margin through a fixed deposit receipt with a lien in HDFC Bank’s favour. HDFC’s facilities also have unconditional and irrevocable personal guarantees from Suraj Pandey and Sadhvi Pandey.

Kotak Mahindra Bank requires a fixed-deposit lien equal to 40% of the limit for the applicable collateral arrangement, alongside personal guarantees from Suraj Pandey and Sadhvi Pandey for the enhanced amount. Federal Bank requires a 40% fixed-deposit cash margin for working-capital demand-loan and cash-credit limits, an irrevocable personal guarantee from the same two promoters and a security cheque covering the entire facility amount. These disclosed terms mean that changes in collateral, deposit margins or guarantee compliance could affect the facilities.

Conclusion

Acme India’s FY 2025-26 ratios show different effects from its debt and equity position. Debt-equity declined to 0.82x as shareholders’ funds reached Rs 103.5471 crore, but debt-service coverage fell to 0.89x because the company’s defined debt-service numerator was below interest expense and current principal repayments. The Rs 78.9609 crore of short-term debt at March 31, 2026 makes the timing of repayment obligations relevant to that difference.

The next disclosed indebtedness position is June 30, 2026, when Acme India reported Rs 65.869 crore of secured fund-based balances and Rs 68.7497 crore of secured non-fund-based balances. Later disclosures would show whether debt-service coverage changes as finance costs, current principal payments and working-capital facility usage evolve, and whether the disclosed cash-margin, collateral and promoter-guarantee conditions remain in place.